Freddie Mac Enforcement of HAMP Violations

On August 3, 2010, in Mortgage, by Matthew Forbes

A common trend among consumer protection attorneys is to attempt to stop foreclosures based on the flagrant disregard of by the servicers of the HAMP guidelines that they are bound to follow, either because the loans are owned by Freddie Mac or Fannie Mae, or because they signed Servicer Participation Agreements.  Most often, when a homeowner is being reviewed for a HAMP modification, they have not been issued a denial or given the opportunity to contest a denial, and so the bank just goes ahead and forecloses anyway – despite the HAMP’s direct prohibition against this action.

In defense of these litigation suits, however, the attorneys for  the servicers are arguing that the HAMP is a contract between the servicer/investor and the US Treasury.  As a result, they argue, the homeowner in reality has no rights, as the individual homeowner is not a party to the contract and are not an intended third-party beneficiary to it.  To conclude, the banks argue that Freddie Mac is the police authority for any such violations and therefore only Freddie Mac can enforce the HAMP provisions.

In case the Courts decide to side with the banks on this issue (at the time of the publishing of this article many courts in California have taken the side of the banks whereas the Courts on this side of the coast – Massachusetts and D.C. among others – have yet to rule on this matter), I decided to call Freddie Mac and to find out what protocol it has in place to handle such matters. Here is a summary of my call:

I dialed (800) 373-3343 for the HAMP/loss mitigation department, and then sat on hold…for a very…..long time.  After 25 minutes on hold, I was directed to “Guness”, who I am fairly certain was not in the Pacific, Mountain, Central or Eastern time zones.  I explained to him my situation:  I have clients who, despite their best efforts and eligibility for a modification under HAMP, are being screwed by the servicers who improperly attempt to foreclose before a meaningful review under the HAMP guidelines has been completed and/or have failed to provide a written declination, etc.  Moreover, the banks are arguing that Freddie Mac, and not the courts, is the sole guardian angel for screwed borrowers to get assistance and stop the foreclosure.  So Guness, if you would be so kind, please tell me how they/we enlist your assistance to stop the illegal foreclosures.

Let me summarize Guness’ response:

You/they can call the same number I just did (and wait on hold for 25 minutes)

  1. Within a specific period of time before the foreclosure that he could not actually disclose to me (I am not sure if it is 1 day before, 3 days before, 2 weeks before, 4 to 8 days before, whatever), then
  2. They would escalate it to someone else (he could not disclose to whom), and then
  3. Whomever it was escalated to might do something (but he could not say what).  In the case of (1) and (2), when he said he “could not“, he meant he was prohibited from doing so.  In the case of (3), could not” meant he did not have any idea what happened, once it was escalated.

In other words, if you are on the verge of losing your home, Freddie Mac, the guardian of the HAMP program, provides you a toll free number to call.  You then have to pray to God you are calling during the applicable period of time (which they will not disclose), and your file may get escalated to the appropriate department.  If you are so lucky, then the only people you can talk to have no idea what happens next – hopefully, it stops the foreclosure, but nobody can say for certain.  What a fantastic system!

When I continued to question him, insisting that this could not possibly be the correct procedure to ensuring compliance, we were “disconnected.”

Suffice it to say, the next time I am faced with a foreclosure that is proceeding in violation of the HAMP directives, I will both file suit and reach out to Freddie Mac.  At least by the time the issue of standing is resolved, the injunction will have prevented the foreclosure.  In the meantime, maybe I can figure out when to call and whether Freddie Mac does anything to actually enforce the guidelines it is entrusted to monitor.

Matthew Forbes
ForbesGallagher
30 ManMar Drive, Suite 11
Plainville, MA 02762
(508) 809-6141 (office)
(508) 377-9483 (fax)
Contact Matthew Forbes here.

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9 Responses to “Freddie Mac Enforcement of HAMP Violations”

  1. Eduardo Iglesias says:

    Mr Forbes,

    I currently work as a “Loss Mitigation Consultant’ in Houston, TX and have encountered the same problems regarding the adherence to the Supp directives and HAMP guidelines.
    Specifically, GAMC, BAC and Wells Fargo seem to have a hard time recognizing the fact that they are to follow these rules. Some of the Loan Mods I have been working on for the past 2 months have been denied 2-3 weeks before a shceduled sale date and sale dates have not been postponed as promised. I have been doing this type of work since last around September and have learned that sometimes it is not a good idea to wait for these so called “postponement request” to go through. However, the blatant dsiregard of these rules by the mortgage loan servicing industry is completely out of control.
    In some cases the only option the borrower is left with is to file for bankruptcy, as you might know chapter 13 filing makes the Loan Mod process even more grueling and slow.
    To conclude, Im not an attorney so I can not just get up and file suit on behalf of my clients but I’m very concerned about this non-compliance by servicers.
    I have enough borrowers to class action the hell out of the entire mortage servicing industry and all of their players,they should be held accountable along with their foreclosure attrorneys and companies for PUNITIVE DAMAGES.

  2. DONNA says:

    I HAVE JUST FILE SUIT AGAINST PNC FOR VIOLATING HAMP GUIDELINES AND THE MICHIGAN FORECLOSURE STATUTE. WE TOO ARE LOOKING FOR OTHERS TO BRING A CLASS ACTION AGAINST PNC. I QUALIFIED FOR HAMP, AND WAS DENIED FOR 17 MONTHS, THEY FINALLY OFFER ME SOMETHING THAT WAS 50% OF MY GROSS MONTHLY INCOME. THEY BLAMED IT ON THE INVESTOR BUT PROVIDED NO GUIDELINES USED, OR CALCULATIONS. BIG VIOLATION OF MICHIGAN LAW.
    %

  3. Donna,

    I am glad to see you are fighting back. There are a number of class action lawsuits filed nationally against servicers for not following the HAMP guidelines. Last I checked, there are at least 4 in Massachusetts, 1 in Ohio and 1 in DC. Unfortunately, there are a number of cases coming from the West Coast (primarily California) that have held the homeowner cannot bring a lawsuit based on violations of the HAMP. The banks are arguing that the HAMP is basically a contract between the federal government and private entities. The argument continues that the homeowners were not parties to the contracts, and are NOT intended third party beneficiaries of the contracts. As such, they cannot sue for violations of those contracts.

    The good news is, other than the west coast (and an earlier case in Indiana, I believe), other courts have yet to buy that argument. Hopefully, we will soon see some decisions supporting the homeowner. Otherwise, it is incumbent upon Freddie Mac to enforce the HAMP provisions. Having spoken to Freddie Mac in detail about there enforecement protocol, it is fair to say they have no idea what they are doing. Accordingly, they will provide little to no assistance to the individual homeowner, like yourself, who may be in danger of getting a false denial and/or losing their home in foreclosure. Good luck.

  4. DONNA says:

    ANYTHING NEW REGARDING BORROWER’S “STANDING”

  5. I, too, am under the Michigan Foreclosure Act. I negotiated with Chase for a 3 month trial period modification wherupon my modification, had I made the 3 pmts in a timely fashion, would become permanent. It was a negotiated contract between Chase and myself outside of HAMP. Just before my 3rd and final trial period payment was due Chase sold my file to IBM Lender Business Process Servicing, Inc., a wholly owned subsidiary of IBM. IBM LBPS took my 3rd pmt and deposited by cashier’s check. There were no objections to me for anything be either Chase or LBPS for my 3 mo trial period. But, when I sent in my 1st permanent pmt for the same modified amount LBPS sent it back to me because it wasn’t in the amount of my original, non-modified, monthly payment. They had the Orlans lawfirm send me a letter accelerating my balance due and announcing that they were initiating foreclosure against me. I told them that I was not under HAMP, but was under the MI Foreclosure Act and they could not proceed with “Foreclosure by Advertisement”, but would have to try to foreclose with a lawsuit which would allow me to enforce my contract with Chase, and by assignment, with LBPS which has to honor my contract with Chase. LBPS and their attorneys are idiots. I am at drjustian@yahoo.com

  6. Donna, here is the link to the case in CA where the US District Ct held that Ademar A. Marques could sue as a 3rd pty beneficiary. He sued Wells Fargo Home Mortgage, Inc. He had until Aug. 31 to amend his complaint to allege that he applied for HAMP, if he did, he could pursue his case.
    That is good news. However, I guess I don’ know how to research in the internet, I can’t find anything verifying that he did file his amendment or whether Wells Fargo settled with him to avoid a precedent. This is the site with the court opinion: http://www.scribd.com/doc/36644853/Marques-v-Wells-Fargo
    If you find out anything let me know please: drjustian@yahoo.com

  7. Wilson says:

    We signed a GMAC final mod on 9/20/10 and on 10/1/10 our payments we were told increased more than $300.00 since GMAC admitted making a mistake in calculating the escrow during the trial period (although GMAC had already been paying taxes and insurance for over 1 yr).

    Please advise on how I could get GMAC to recalculate the final mod, and or uphold to the signed final mod amounts?

    Please advise on who can review / audit our loan and the final mod too.

    HELP !!!

  8. Luiza says:

    I am Ademar Marques wife. Our attorneys have answered the complaint and we are waiting for the Judges ruling. We also are filing a class action law suit against Wells Fargo. We plan to fight until the end. Our attorney’s Octavio “Vito” Cardona-Loya II – Golden & Cardona-Loya, LLP -3130 Bonita Road, Suite 200B -Chula Vista, CA 91910 -T: (619) 476-0030 F: (775) 898-5471, are better prepared to answer any questions.

  9. Tim says:

    I went through this same grueling ordeal from Feb 2009 through most of 2010.
    We finally got a permanent modification in June 2010. Our income is fixed by Social Security and checks arrive at the same time each month. We immediately pay our mortgage electronically through our bank (no longer PNC) to PNC directly.
    All has been fine through the last seven months, now we are again getting threatening calls on the 9th (after electronic payment) asking if we still occupy the house? Do you intend to make your monthly payment?
    etc. etc.
    Apparently the banks don’t like compliance with the program any more than they like participating in it. I am very curious as to what will become of all the millions of HAMP Applicants once the administration changes in Washington.
    I really think a class action is not only warranted but demanded. Unfortunately there seem to be no lawyers willing to take on this massive of a case against all of the potential defendants from the banks through the government to the ultimate mortgage servicer’s.
    Get me out of this insane country as soon as possible because we are all going down like the Titanic.

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